When it comes to a plan for retirement, your 60s is generally treated as the decade in which you'll transition into retirement. If you're still working in your 60s, you're eligible to make catch-up contributions to your IRA and your 401(k) or similar employer-sponsored retirement account. In your 60s, you're also eligible to take money out of those plans without facing a 10% early distribution tax on top of any normal taxes you may owe on the distribution, but you don't face mandatory distributions.
In addition, your 60s is the time when you can usually start taking Social Security retirement. You're allowed to take Social Security retirement as early as age 62, and your monthly benefit increases the longer you wait between then and your 70th birthday. In between is something known as your "Full Retirement Age." That's the age that Social Security uses for calculating your base benefit and the age at which you can start drawing benefits while still working without facing a penalty.
What if you haven't finished your plan for retirement in your 60s?
The rules around retirement planning view your 60s as a decade of transition from work into retirement, but not everyone that age has a fully funded nest egg. According to the Federal Reserve's 2013 Survey of Consumer Finances, households headed by a person aged 55-64 had a median net worth of around $166,000, while those headed by a person aged 65-74 had a median net worth around $232,000. While that's a respectable amount, it may not be enough to fully fund a comfortable retirement.
If you find yourself in your 60s with a plan that still needs some help, don't despair. You can still get to retirement, but it may not be quite as soon or quite as rich as you had originally hoped. Key things you can do to improve the retirement you do get include:
Work a little longer: Every year you work is another year you can add more to your nest egg, another year for your money to grow on your behalf, and another year less that your retirement nest egg has to support you. If you're willing and able to work a few years longer than a traditional retirement age, that can translate directly to a more comfortable retirement once you do call it quits. In addition, every year that you delay taking Social Security between age 62 and age 70 increases that monthly benefit, too.
Focus on cutting your costs: In your 60s, you might very well start to see your expenses start to drop. If your kids are grown and independent, the costs of caring for them can both shrink and become more voluntary. If your mortgage is paid off, your housing costs can drop -- or you can tap your home equity by downsizing or moving to a cheaper community. Likewise, many communities offer "homestead" exemptions for seniors, which lower property taxes.
Continue to own stocks: In your 60s, it still makes sense to keep a portion of your portfolio invested in stocks, even if you are retired or are planning to retire in the fairly near future. After all, you need your portfolio to last the rest of your life, and over the long haul, stocks typically have the potential for higher rates of return than bonds do. By keeping some money in stocks, you give your nest egg a fighting chance to last as long as you do. Just be sure that you're not relying on your stocks for money you expect to spend in the near future.
Keep investing new money: Remember that, in your 60s, if you're still working, you can continue to contribute to your IRA and your 401(k). With the catch up provisions, you can contribute up to $6,500 per year in your IRA and $24,000 in your 401(k). On top of that, you can contribute an unlimited amount into a standard brokerage account. While compounding won't help as much as it could have when you were younger, the money you sock away will build your nest egg to help fund your retirement.
Make your 60s the time to get yourself retirement ready
Your 60s can be a great time to get yourself retirement ready, but time is running short if you haven't made substantial progress toward your plan. Whether you're close to the finish line or still have a way to go before you get there, right now provides you your best shot at making the tweaks you need to get you from here to comfortably retired. Get started now, and when it is time to punch the clock for your very last time, you'll be very glad you did.
Chuck Saletta has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.